The Q3 signal

Beginning today, corporate India will start rolling out the earnings season for the third quarter (Q3) of 2012-13. It will be the most keenly watched data.

Not just because the numbers will determine share prices, but for the cues that it will give on the state of the economy. Till October, it was a sense of doom and gloom. Today things no longer look so bad.

For one, new policy initiatives have quelled claims of policy paralysis. The United Progressive Alliance’s show of nerves in going through with a rail fare increase, pending for 10 years, has stoked expectations of more policy initiatives to come. New macro data suggests the economy has bottomed out. Yes, downside threats from inflation and the external sector continue to exist—they are not better or worse than what existed.

The Q3 data should confirm whether the worst is behind, setting a perfect backdrop for the Union budget.